HR and payroll for accountancy practices in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll and HR for an accountancy practice in India carries the same statutory obligations as any other employer — EPF, ESI, TDS, gratuity — but the sector adds its own pressures: articled clerks under ICAI regulations, high attrition among qualified staff, and the need to handle confidential client data inside your own HR systems.
Employment categories you are likely to have
Most CA firms and accountancy practices employ a mix of people, each with different treatment under employment law and payroll:
Partners are not employees. They draw profit shares, not salaries, and fall outside EPF, ESI and TDS on salary. Their tax obligations are handled separately.
Qualified staff (CAs, CMAs, company secretaries) are regular employees. Standard payroll rules apply in full — EPF at 12% each from employee and employer, ESI if they fall below the applicable wage threshold, TDS deducted monthly and deposited with the government, Form 16 issued annually, and Form 24Q filed quarterly.
Articleship trainees are governed by the ICAI's Training Guide rather than standard employment law. They receive a stipend, not a salary. The stipend is taxable income in the trainee's hands, but the relationship is not a standard employment relationship. You are not required to deduct EPF or ESI on stipends, though you must satisfy yourself on TDS if the stipend crosses the basic exemption threshold under the trainee's applicable income tax regime. Keep clear records of stipend payments regardless — audit trails matter especially in a firm that audits others.
Contract and freelance staff hired for busy season or specialised work should be engaged with written contracts that clearly establish the nature of the engagement. Where a consultant's annual receipts cross the relevant TDS threshold, you must deduct TDS at source under the applicable section of the Income Tax Act and issue Form 16A.
Payroll specifics for the profession
A few payroll features are either more common or more sensitive in accountancy practices.
Variable pay around peak periods. Most practices see a sharp workload spike from January to March (advance tax deadlines, year-end audits) and again around the ITR filing season. If your firm pays overtime or performance bonuses, structure them clearly in the offer letter. Ad hoc payments complicate Form 24Q and increase the risk of short deduction notices from the department.
TDS on salary is your primary compliance risk. Because your staff are trained in tax, any error in Form 16 or a mismatch between what Form 16 shows and what appears in Form 26AS will be noticed immediately — by the employee and, potentially, by the department. Run a 26AS reconciliation for every employee before you issue Form 16 each year.
Gratuity provisioning. Gratuity is payable after five continuous years of service. Attrition in accountancy practices tends to peak at the 2–4 year mark, so many firms never actually pay it. That is not a reason to ignore provisioning. Qualified staff who do stay beyond five years often reach senior or manager level, where their last-drawn salary is higher, making the eventual liability significant. Set aside a provision annually rather than treating it as a cost you will deal with when it arises.
HR considerations specific to accountancy
ICAI obligations run alongside your HR obligations. For articleship, the ICAI sets working hours, leave entitlements and stipend bands. Your HR policy cannot contradict these. Where you have discretion — for example, on study leave before exams — document your policy clearly so trainees know what they are entitled to.
Confidentiality and data handling. Your staff process sensitive client financial data daily. Employment contracts should include explicit data confidentiality clauses and, for senior staff, appropriate non-solicitation provisions. These are enforceable in India though courts will scrutinise unreasonably wide restraints, so keep non-compete clauses narrow and time-bound.
Managing attrition. The jump from articleship to a Big Four or industry role is a standard career path. Accept it and build an HR model that works with it: clear progression for those who stay, decent notice periods written into contracts, and proper exit procedures that include revoking access to client data and document management systems on the day of departure.
The Labour Codes and what they mean for your practice
India's four consolidated Labour Codes have been in force from 2025. For a small or mid-sized accountancy practice, the most immediate operational changes involve revised definitions of wages (which affect the basis on which EPF and gratuity are calculated), changes to working hour structures, and updated leave entitlement rules. Review your offer letter templates and HR policy documents against the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code. If your practice was running on policy documents drafted before 2025, they likely need revision.
Record-keeping standards
A firm that advises clients on compliance cannot afford loose internal records. Maintain payroll registers, EPF challan copies, TDS deposit confirmations, Form 24Q acknowledgements and all employee declarations (investment declarations, Form 12BB) for a minimum of eight years. Store them in a format that allows retrieval without depending on a single person — a common gap in smaller practices where one office manager holds everything.
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